Hostile takeover

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The term hostile takeover (sometimes also unfriendly takeover ) is usually used by managers of a company to describe the action of an investor who intends to buy this company and, for this purpose, directly to the owners of the company (usually with a public takeover offer ) applies without first obtaining the consent of the takeover candidate. The term "hostile" often only represents the negative view of the management of the takeover candidate - for the purchase of the majority of the capital in a company against the will of its management board , supervisory boardor workforce - represent; the literature therefore speaks in this context of an “uncoordinated” takeover instead of “hostile” .

"Hostile" takeovers are often improved in terms of their conditions (price or commitments about the existence of locations, etc.) and ultimately accepted by the management or supervisory board of the takeover candidate. If the takeover candidate agrees, one speaks of a "friendly" takeover.

Interests of those involved

investor

Without addressing the owner directly, the investor usually only has access to information that is accessible to everyone. Ex-post surprises due to incorrect assessments are common. The investor's management must therefore rate the chances of the takeover very highly.

Takeover candidate

owner

The owners ( shareholders of the target company) are the only ones who can prevent the takeover by not offering their shares to the bidder. To avoid this, the investor's purchase offer is usually above the (stock market) value of the shares; a “hostile takeover” is then a win for shareholders. If a minority of shareholders forms who have not accepted the offer, they can later be forced to sell the shares via a squeeze-out under certain conditions .

management

One of management's jobs is to maximize the value of their business to owners - so "defending" is a rational response to offers to buy, especially when they are opportunistic in value. But managers can also try to prevent the change of ownership, especially since the top management of a takeover candidate is regularly not taken over after the takeover. There are several ways of defense:

  • Criticism of the evaluation : The offer of the external company is criticized as too low and the "fair" value of its own shares is placed above the offer in order to prevent the shareholders from a (premature) sale or to effect a subsequent improvement of the offer (cf. : Mannesmann takeover by Vodafone in 2000). Particularly in the case of offers where payment is made in shares of the acquiring company, the strategy of the acquiring company can also be criticized and compared with the future prospects of one's own, independently managed company.
  • White knight : search for a third investor to take over the target company. The voluntary alternative takeover by a company other than the attacking company will also give up independence, but advantages may result from a more suitable business strategy or more extensive existing product lines and investments (see: Schering takeover by Bayer instead of Merck in the year 2006).
  • Takeover of third companies : The attacked company can, as it were, in opposition to the takeover offer, expand its own group through externally financed company acquisitions to such an extent that the emerging new group with the resulting obligations makes the takeover unattractive for the attacker (see: Preussag - acquisition of Thomson Travel Group in 2000).
  • Poison pill : On the one hand, the target company can increase its market capitalization through a capital increase and thus make a takeover much more expensive. Furthermore, “poison pills” can be set up in the form of legally binding voluntary commitments for the benefit of the stakeholders in the event of a takeover. These can be environmental requirements for other locations or license reimbursements for customers (see Peoplesoft takeover of Oracle in 2005).
  • Golden parachute : The target company's management can contract substantial payments in the event of a takeover.

What all strategies have in common is that they often result in a higher share price for the takeover or result in a merger with companies other than the attacking group. This can result in advantages for existing locations, the workforce or product lines as well as for the shareholders' income. On the other hand, there are often excessive communication costs and the uncertainty of investors and customers during the takeover battle.

Legal

It should be noted, however, that German law prohibits all preventive measures by the Management Board (regardless of their success) and imposes a fine ( Section 33 WpÜG , Section 60 (1) No. 8 WpÜG). The search for competing offers ("White Knights") is excluded, as is evident from Section 22 WpÜG.

List of hostile takeovers

Germany

International

Individual evidence

  1. deutschlandfunk.de: Germany's first hostile takeover